Archives for April 22, 2013

The Carlyle Group Invests in Addison Lee

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The Carlyle Group has made a significant investment in Addison Lee, a provider of transportation services. Capital for this investment will come from Carlyle Europe Partners III L.P., a €5.4 billion fund that makes mid and large cap investments.

Addison Lee is a provider of transportation and private hire services in London and the South East of England. Using its fleet of 4,500 vehicles, the company carries over 10 million passengers and makes over 1 million courier deliveries per year. Addison Lee was founded in 1975 and is based in London (www.addisonlee.com).

The focus for Carlyle’s investment in Addison Lee will be to drive business expansion both in the UK and internationally by providing transport services to a wider range of blue chip corporates and individual customers. This will be achieved by enhancing customers’ access to the company’s fleet and new innovations in the company’s technology platforms.

“Addison Lee is a strong business and brand with great potential. As experienced investors in the automotive and transportation sector through companies such as Applus+, Hertz and RAC, we hope Carlyle’s experience and expertise will allow us to support the plans to continue growing the business both in the UK and internationally and to create value,” said Andrew Burgess, Managing Director of Carlyle Europe Partners.

Carlyle was advised on the transaction by Deloitte, OC&C and Latham & Watkins. Addison Lee was advised by Catalyst Corporate Finance and Joelson Wilson.

The Carlyle Group invests in buyouts, growth capital, real estate and leveraged finance in Africa, Asia, Australia, Europe, North America and South America focusing on aerospace & defense, automotive & transportation, consumer & retail, energy & power, financial services, healthcare, industrial, infrastructure, technology & business services and telecommunications & media. The Carlyle Group employs 1,400 people in 33 offices across six continents and is based in Washington, DC (www.carlyle.com).

© 2013 PEPD • Private Equity’s Leading News Magazine • 4-22-13

Aquiline Acquires Equity Insurance Group

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Aquiline Capital Partners has completed the acquisition of Equity Insurance Group, a specialist motor insurer, from Insurance Australia Group.

Equity Insurance Group provides auto insurance to more than one million policyholders. The company, through its Equity Red Star division, offers a range of insurance for private cars, classic cars, vans, motorcycles, taxis, minibuses, fleets, haulage and agricultural vehicles, households and personal accidents. The company is one of the ten largest motor insurers in the UK and has been insuring commercial and individual customers for more than 60 years. Equity Insurance Group is based in Brentwood, UK (www.equitygroup.co.uk).

Aquiline Capital Partners invests in financial services enterprises in industries such as property and casualty insurance, banking, securities, asset management, life insurance and financial technology. The firm is based in New York (www.aquiline-llc.com).

With the closing of the transaction, Aquiline has appointed Ian Parker as Chief Executive Officer of Equity Insurance Group. The company has also announced a new board of directors which includes Patrick O’Sullivan as Chairman. Messrs. Parker and O’Sullivan will lead the company’s senior leadership team in redirecting the emphasis of the business to its core specialty motor insurance lines.

Mr. Parker joins Equity Insurance Group from specialist insurer and reinsurer Hardy Underwriting, where he was Chief Operating Officer. Previously, he served as Zurich Financial Services’ Chief Executive of Direct & Partnership European General Insurance and Chairman of Zuritel S.p.A and Deutsche Allgemeiner Versicherung.

Mr. O’Sullivan brings to the company decades of experience in insurance and financial services. Most recently, he served as Vice Chairman of Zurich Financial Services. He is the Chairman of Old Mutual and a non-executive director of Man Group plc and Bank of Ireland.

“Equity Insurance Group has been a leading underwriter in the specialty motor space,” said Jeff Greenberg, Chief Executive of Aquiline. “Ian and Patrick are great additions to the team and their leadership will be integral in building the company’s reputation for market-leading underwriting profitability and customer service over the coming years. We look forward to working with Ian and Patrick and the rest of the senior leadership team.”

Macquarie Capital acted as sole financial adviser to Aquiline on the transaction.

© 2013 PEPD • Private Equity’s Leading News Magazine • 4-22-13

American Capital Active in First Quarter

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American Capital’s Sponsor Finance Group invested over $59 million in the first quarter to support the acquisitions of three companies.

“During the first quarter of 2013, we invested in three global middle market companies. Our transaction execution was efficient and we were able to provide competitive pricing and terms, working both directly with sponsors and participating in syndicated second lien term loans with leading investment banks,” said Adam Spence, Managing Director, American Capital. “The American Capital Sponsor Finance Group, with 29 investment professionals in the United States and Europe, is able to provide one stop financing solutions and subordinated debt capital and participate in syndicated second lien term loans.”

In March 2013, American Capital invested in a second lien facility to support the refinancing of Total Safety, a portfolio company of Warburg Pincus. Total Safety is an outsourced provider of safety and compliance products and services. Sectors served include on-site safety, turnaround safety, gas detection, respiratory protection, rescue, safety training, fire protection, safety compliance and inspection, industrial hygiene, onsite emergency medical treatment/paramedics, communications systems, and engineered system design. The company operates from more than 105 locations in 13 countries and is headquartered in Houston (www.totalsafety.com).

Also in March, American Capital invested in a second lien facility to support Abry’s acquisition of Datapipe, a provider of outsourced IT services to medium and large size enterprise customers. Datapipe has data center facilities in New York, Virginia, San Jose, London, Iceland, Hong Kong and Shanghai and is headquartered in Jersey City, NJ (www.datapipe.com).

The third transaction in Q1 was completed in February when American Capital invested in a new first lien facility as part of the refinancing of its existing portfolio company, Neways, a multi-level marketing company. American Capital acted as lead syndication and administrative agent on the transaction. Neways sells personal care and nutritional health products, including liquid vitamins, dietary supplements, and beauty care products through a network of independent distributors. The company is headquartered in Springville, UT (www.neways.com).

American Capital is a publicly traded private equity firm and asset manager that originates, underwrites and manages investments of $10 million to $750 million in middle market private equity, leveraged finance, real estate and structured products. Founded in 1986, American Capital has $117 billion in total assets under management and has eight offices in the US, Europe and Asia. The firm is headquartered in Bethesda (www.AmericanCapital.com).

“Our flexible capital and our wide-ranging financing capabilities position us to move quickly and finance new attractive acquisitions, capital structure refinancings and corporate growth initiatives,” said Bowen Diehl, Managing Director, American Capital. “We look forward to an active year of supporting our sponsor partners in new buyouts and in growing their portfolio companies, while forging and enhancing new relationships in the sponsor community.”

© 2013 PEPD • Private Equity’s Leading News Magazine • 4-22-13

Fitch: Strategic Buyers Have Advantage in Life Sciences Sector

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Strategic buyers may have a leg up on private equity buyers when it comes to bidding on life sciences companies, according to Fitch Ratings. This is illustrated by the recent deal struck by Thermo Fisher Scientific Inc. to buy Life Technologies Corp.

Thermo Fisher believes it can profit via the deal by paying $76 per share for Life Tech, which is quite a bit higher than the price the company was originally expected to fetch through the bidding process. The Thermo Fisher bid was also significantly higher than the amount reportedly offered by a consortium of private equity companies, according to a number of press reports. Thermo Fisher Monday announced it would acquire Life Tech in a transaction valued at $13.6 billion, which includes an assumption of about $2.2 billion in debt.

Life Tech, like many of its peers in the life sciences sector, is highly cash generative. This is an attractive characteristic for private equity firms seeking acquisitions since these businesses can support a good amount of debt used to finance a going-private transaction.

However, according to Fitch, financial buyers may be taking a cautious view of the life sciences sector given uncertainties regarding the outlook for the healthcare industry. These include the implementation of the Affordable Care Act, federal deficit reduction measures (sequestration and possible entitlement reform) in the U.S., and slow organic demand growth for healthcare products and services in developed markets.

Thermo Fisher’s successful bid also highlights the power of scale in the life sciences sector. In addition to the typical types of cost synergies available to a strategic buyer, Thermo Fisher will see benefit from combining the vast and complementary product portfolios of the two companies, which it will sell through the company’s well developed sales channels. This could provide a boost to Life Tech’s recently lackluster sales growth in research settings.

Fitch believes that new technologies that demonstrate both clinical and economic value in healthcare consumption have excellent growth prospects. There is accelerating pressure on the industry to lower the rate of growth in healthcare spending in developed markets while improving outcomes for patients. The application of next generation DNA sequencing in clinical diagnostics is an example of technology with such potential.

Life Tech has recently been investing in building its portfolio of sequencing assets, but it remains a small part of the overall business. As a strategic buyer, Thermo Fisher is better positioned to make investments necessary to capitalize on the growth potential of these assets. There remains risk related to obtaining the regulatory and government approvals necessary to support wider application of the technology, which will require financial flexibility to make incremental investments.

© 2013 PEPD • Private Equity’s Leading News Magazine • 4-22-13